Audit details Flint School District's $19 million deficit

FLINT, MI – The Flint School District learned of 18 “deficiencies in internal controls” that auditors said played a role in the district’s $19 million deficit.

And those problems didn’t appear overnight.

“We think those conditions have probably been there for some years,” said Kenneth Leslie of Plante Moran during a special board meeting on Monday, Nov. 25.

The problems ranged from delinquent payments to the state’s employee retirement fund to inadequate time-keeping for hourly employees to the district’s general fund deficit.

The district’s general fund is in a $10.4 million deficit and also has several other funds that accumulated an $8.6 million deficit.

The $8.6 million is what Flint still owes for misspending money designated for the Genesee Area Skill Center.

“The audit did not reveal financial misconduct or intentional acts of withholding information from the public,” the district said in a statement.

Auditors said that the Flint district has lost nearly 12,000 students and the state has reduced its funding to local schools significantly over the last decade.

Flint missed the Nov. 15 deadline for filing its audit, which is required under state law, and risked losing its December state aid payment.

The board approved the audit by an 8-1 vote, with David Davenport casting the dissenting vote.

“Some unpopular decisions will continue to need to be made,” said board President Antoinette Lockett.

“The responsibility to repay the vocational funds that were used for other payments remains with you,” said Keely Munger, deputy superintendent with the Genesee Intermediate School District. “... We will not and cannot forgive this debt.”

But Plante Moran said in the audit that there was “substantial doubt of collectability,” of that money.

“We don’t see where you’ll have the resources to pay,” the $8.6 million owed the GISD, Leslie said.

The district is using the firm Taylor and Morgan to implement changes that will help the district to get on solid financial ground.

“Plante Moran will obviously see things that long-time auditors and employees miss,” Interim Superintendent Larry Watkins said in a statement. “Tonight is only the first step in reporting to the community on the financial status of the district.”

The GISD had terminated its contract with Flint after Flint used county millage money “to conceal the true amount of its overall deficit,” the GISD said.

Flint pink-slipped about 140 staff in May after announcing the district would close four schools and restructure three others in March.

In 2012, the deficit bloomed to $4 million and district officials admitted it was closer to $11 million because of the misspent millage money it owed the Genesee Intermediate School District to fund the Genesee Area Skill Center.

The deficit started at $3.7 million in 2011 and an audit that year showed the district had lax financial record-keeping, used grant money improperly and did not anticipate future spending.